Irish Life is to sell a minority stake in the ILAC shopping centre at Mary Street, Dublin 1, to the ESB Superannuation Fund for £30 million. The sale is expected to be completed shortly before the 17-year-old centre is remodelled and extended at a cost of £25 million.
The ESB fund's investment, which will give it a 30 per cent stake, will easily cover the cost of the redevelopment, which will increase the overall volume of retail space by 40 per cent. The deal also makes good business sense for Irish Life because with the value of the centre expected to increase to £100 million when it is enlarged and upgraded, it will still hold a £70 million stake in what will be a significantly better retail complex.
Irish Life has been anxious to dilute its interest in the ILAC for many years, but was unable to do so until it concluded a deal with its former ground landlord, Dublin Corporation, under which the corporation took over ownership of the adjoining car-park in return for giving Irish Life freehold rights of the shopping centre. Irish Life's strategy of reducing its interest in the ILAC is based on the belief that it should not have such a high proportion of its funds in one property. If it did not take in a minority partner, the ILAC would account for one-fifth of its entire portfolio.
The ESB fund's decision to buy into the ILAC will not surprise many, because it has been looking for a prime retail investment in Dublin for many years. A few years ago it attempted to acquire part of the redeveloped Brown Thomas store on Dublin's Grafton Street but the investment never apparently came on the market. Mr Brendan Donohoe, who manages the property fund, pulled off a considerable coup last autumn when he pre-funded 55,000 sq ft of office space at the G&T Crampton site on Shelbourne Road, Ballsbridge, and quickly let it to Iona Technology.
Irish Life is awaiting planning permission to redevelop the ILAC, increasing the volume of net retail space from 220,000 sq ft to 320,000 sq ft. It will have a first floor gallery with shops along the central mall. The entire Moore Street mall is to be redeveloped to accommodate a new store of 120,000 sq ft for Dunnes Stores. The multiple will trade at basement, ground and first floor levels, with a supermarket as well as drapery and household departments. Dunnes is to surrender its other store on the central mall in part exchange for the new store.
